Download Regional differencies in the agriculture of Bulgaria and Romania

Volumul VIII, Numărul 14 / 2006
ISSN 1454-9980
Regional differencies in the agriculture of Bulgaria and Romania
(pag. 38-58)
Margarita BOGDANOVA
Volume VIII, Issue 1 (14) / 2006
REGIONAL DIFFERENCIES IN THE AGRICULTURE
OF BULGARIA AND ROMANIA
Margarita BOGDANOVA
1. Introduction1
Today, after the finishing the accession negotiations with EU, Bulgaria and Romania have
the real chance to become full member states.
But there are significant disparities between
them and other state members. The differences
concern many economic sectors and they can
impede the integration process and to prolong it
in the future.
Agriculture is the sector in which the
asymmetry is the biggest. On one hand the share
of employed persons in agriculture is very high
in the both countries. As a result the productivity
per worker in the sector is lower than in EU. On
other hand, in the agriculture of Bulgaria and
Romania will be initiated many changes, which
should increase its competitiveness. Because of
the high employment in the agriculture in the
both countries, the reforms can be very painful
and they can become a social problem. That’s
why the reforms must be conducted carefully
and the advantages and disadvantages should be
weight. In this sense the research of regional
disparities in agriculture of Bulgaria and Romania on one hand and EU on other hand, is a
question of present interest.
Except similarities there are many differences between the two countries. Therefore the
applying of common approach to them could be
unjustifiable and useless. So the outline of the
1 Corresponding address: Em. Chakarov Str. 2, Tcenov
Academy of Economics, 5250 Svishtov, Bulgaria,
e-mail:[email protected]
regional economic asymmetry in the agriculture
of Bulgaria and Romania is relevant both to European Commission and to the governments of
the countries and for the economic subjects, who
will be direct affected by the coming changes.
The sources of information for this research
are statistical yearbooks of the two countries,
statistical information of EUROSTAT, strategic
planning documents of the two governments, the
monitoring reports of European Commission and
so on.
2. Formulation of the regional
differences issue
One of the major issues in the beginning of
the 21st century is the deepening of regional differences. This issue is most explicitly revealed
by the growing social disproportions among individual countries and groups of countries.
Asymmetry can have various dimensions, yet it
is a phenomenon that is becoming more and
more topical to a large number of countries in
the world.
This holds particularly true to the European
Union. Being a complex device with an ever
changing status quo, the EU has been going
through incessant evolution during the last years.
Its parts vary in their dimensions and mechanisms but they are to function as a single whole.
The unification of those various parts of a single
device is a slow process that is further complicated by the spatial expansion of the system and
the introduction of new elements to it. Not surprisingly, the study of regional asymmetry and
the proposals of measures for its reduction are a
Regional differencies in the agriculture of Bulgaria and Romania
focus of special attention to the European Commission. Diminishing regional discrepancies is
the corner stone of regional policy, whose aim is
to advance social and economic unification
within the Union. The guideline of regional policy in the EU is to support less developed
regions and social communities and establish favorable
environment
for
income
and
employment convergence, and as a result lead to
convergent competitiveness of different countries and regions within the EU.
The ambition to reduce regional discrepancies is in the core of a major complex process
through which the world is going nowadays –
globalization. Regardless of which interpretation of the concept globalization we have in
mind, it is inevitably related to overcoming
backwardness within various groups, transforming social structures through technological
innovation, changing the way of life, and hence
– reducing social and regional discrepancies
among countries in the world.
Regional asymmetry is overcome by various policies and instruments for economic and
social convergence. According to I. Angelov
(2003), there are two basic types of convergence
in economic theory and practice – nominal and
real.
Nominal convergence relates to growing
similarities of nominal values of macroeconomic
stability, namely: the relative share of public
deficit within the GDP, the share of public debt
to GDP, average inflation rate, long-term nominal interest rate, exchange rate, etc. Thus, for
example, the convergence criteria of the Treaty
of Maastricht for establishing an economic and
monetary union are considered to be nominal
values.
Real convergence is more difficult to
measure as it is rather a process of increasing the
similarities among life-styles, than obtaining two
or more equal values. Hence real convergence is
the process of convergence of various aspects of
the development of countries.
The convergence theory related directly to
the theory about the convergence of economic
systems and hence the theories about economic
growth. This could be explained with the basic
assumption that convergence should come as a
result of less developed economies’ efforts to
reach advanced economies and not vice versa.
According to the neoclassical growth
model, presented by Ramsey, Solow, etc. eco-
39
nomic growth per capita is reciprocal to the initial GDP rate or individual incomes. Hence in a
more narrow sense, if we have similar economies in terms of production technologies, then
poor economies would have a higher growth rate
than rich ones. This is due to the diminishing return of capital. Thus according to neoclassicists,
there are powers in society which influence automatically the convergence of GDP and
incomes per capita in different countries, i.e. after a certain period convergence is a fact and
regional discrepancies become insignificant.
A number of further speculations have been
made on the basis of the neoclassical theory.
One of the most popular ones is that of Robert
Barro and Javier Sala-i-Martin (1992). They
formulate a regional model comprising twentytwo factors that influence economic growth,
namely: level of incomes, GDP structure, inflation, financial market equilibrium, cross border
trade tariffs, etc. Barro and Javier Sala-i-Martin
then calculate beta regression coefficients based
on statistical data, that would help identify by
how many units the dependent value will change
if the factor dependent variable is changed by
one unit.
J. Bradford de Long puts to criticism the
model proposed by Robert Barro and Javier Sala-i-Martin, as they have included, alongside
with strictly economic factors, variables such as
religious traditions (fro example, Confucianism
and Islam); geographic latitude of the country;
the share of Protestants, Buddhists or Catholicists in the population; and they have even
examined how much a country’s development is
influenced by its being a former Spanish colony.2
Latest theories of convergence are based
on an important consequence of existent significant socio-economic discrepancies – the
growing terrorism threat. In its declaration on
combating terrorism from March 2004, the European Committee stated that:” An investigation
will be made into the relation between terrorism
support and extreme religious and political beliefs and the influence of socio-economic
2 Thus for example, Sala-i-Martin claim that the share of
Protestants and Catholicists within a given population are
reciprocal to the economic growth, while Buddhists influence economic growth favorably. For further details see:
Bradford DeLong, J. Comment on Sala-i-Martin, "I Just
Ran Two Million Regressions". http://www.j-bradforddelong.net/Comments/decadenewgrowth.html
40
factors”.3 Terrorism is considered to be stemming from socio-economic discrepancies among
countries or groups of countries, alongside with
other major prerequisites.
Anthony Venables (2002) believes that establishing an economic union leads to
diminishing regional discrepancies among
member states only if the union includes relatively rich countries. If this in not the case, the
discrepancy in income per capita keeps growing
and poor members get even poorer. He also
gives a number of examples of economic unions
in West Africa and Central America to prove his
thesis. At the same time, Venables takes into account the fact that a tendency for convergence
has been observed among income per capita in
the member states throughout the history of the
European Union.
It is obvious to all researchers that there is
substantial asymmetry between old and new
member states of the EU. The major question
that becomes relevant with the accession of new
countries is whether this accession would reduce
asymmetry, and if yes, in what terms, and what
the expected consequences would be. The debate, as it has been reflected in scientific
literature, comprises various points of view. All
in all, there seems to be no consensus if integrating new countries would lead to symmetry of
fluctuations in the business cycle of different
countries or, on the contrary, shocks would become even more asymmetrical.
Yuliya Demyanyk and Vadym Volosovych
(2004) study the asymmetry between acceding
and current members by examining macroeconomic fluctuations of the GDP. While member
states have unified their business cycles, the
fluctuations of newly acceded do not coincide,
that is during the periods when EU-15 has been
in crisis, the economies of many of the newlyacceding countries have marked a growth. When
the GDP of a country is nonsymmetrical to the
GDP of the group it is about to accede, a danger
occurs of the so-called idiosyncratic shock (typical only of some of the countries), that could
lead to substantial deterioration of welfare in
these countries.
Frankel and Rose (1998) believe that economic integration influences positively the
reduction of asymmetry in GDP fluctuations in
3
http://www.mediapool.bg/site/security/2004/11/page.shtml
Management intercultural 14
the countries of the group. The major prerequisite relates to trade among member countries
which facilitates the expansion of demand fluctuations outside the borders of national econoeconomies.
According to Kalemli, Sоrensen and Yosha
(2004), an appropriate mechanism for reducing
discrepancies in GDP would be the so called risk
sharing among countries. It could be achieved
by means of changes in the taxation system (i.e.
reducing taxes and increasing transfers towards
individuals living in countries in a recession)
and by applying the instruments of capital markets, in which case risk would be reduced
through diversification of the assets portfolio. In
a similar way, consumers could change their
consumption patterns by adapting their savings
to the new situation. If the countries are more
open to the rest of the group and the risk sharing
is more balanced, the symmetry among their
GDP fluctuations would be greater.
A counter-thesis to this theory is the one,
according to which economic integration leads
to further deepening of discrepancies among
countries. This thesis is supported by Krugman
(1993), who believes that lowering barriers to
cross border trade encourages countries to specialize their production. This, he claims, leads to
stronger asymmetry in production, therefore
branch specialization fosters more marked fluctuations in the business cycles of different
countries.
The influence of economic integration on
GDP fluctuations asymmetry and asymmetry of
incomes and expenditures has been shown in
figure 1. It illustrates the basic contradiction in
economic literature, namely – the way in which
lowering trade barriers results in demand expansion, which, in turn, reduces asymmetry in the
production of the EU member states; such lowering of trade barriers, however, tends to
increase branch specialization, which then increases asymmetry in GDP fluctuations.
De Grauwe (1997) calls these contradicting
points of view on the relation between economic
integration and the synchronization of business
cycles “The European Committee point of view”
and “Krugman’s point of view”.
In his research work of the economy of the
Czech Republic, Jan Babetski (2004) tries to
find arguments in favour of these two points of
view. He comes to the conclusions that 1) greater intensifying of trade results in greater demand
Regional differencies in the agriculture of Bulgaria and Romania
dynamics symmetry, while the effect of integration upon supply varies in different countries; 2)
reducing exchange rate volatility influences positively demand shocks balancing. These
findings seem to support the European Commission point of view, which is also known as
endogenity argument of Frankel and Rose.
The European Commission takes into consideration the fact that after the latest expansion
of the EU economic and social discrepancies
41
among member states and among regions have
increased and the common dynamics of the EU
has been reduced. Discrepancies within the
twenty-five member states and 254 regions of
the EU have doubled in comparison to those
present when there were 15 member states only.
The accession of Bulgaria and Romania, and
eventually that of the other Balkan countries,
will clearly increase incomes asymmetry in the
Union.
Fig. 1. Factors which influence the asymmetry of GDP and incomes fluctuations
(Adapted after Kalemli-Ozcan, S., Bent E. Sоrensen, O.Yosha (2004)
3. Regional discrepancies dimensions
Regional discrepancies could be measured
with various instruments of statistics and econometrics. The instruments used to measure
asymmetry would depend on its character, as
well as on the aim and the objectives of the
study.
We could broadly identify these types of
asymmetry: static and dynamic; stable and unstable; bilateral and multilateral; intra-regional
and inter-regional; asymmetry of consumption
and asymmetry of production; microeconomic
and macroeconomic asymmetry, etc.
Static asymmetry on its part could be structural, technological, asymmetry in products,
incomes, in unemployment, in inflation, etc. As
a matter of fact, various indexes could be applied
to
characterize
macroeconomic
development and serve as a basis on which to
identify static discrepancies between two countries or among a number of countries.
Direct measurement of static asymmetry
could be conducted by observing various indexes, such as GDP level per capita; incomes;
expenditures; total tax burden as a share of
42
Management intercultural 14
GDP; average individual salaries; the number,
kind and cost of obtained social services, etc.
By designing groups of indexes more complex measurements could me made, such as the
standard of living; the competitiveness of companies; the state’s planning capacity; the
technological innovations potential (or asymmetry of knowledge), etc.
Dynamic asymmetry could also be considered in various aspects. All processes that
change in the course of time could be evidence
of the lack or presence of discrepancies between
two countries. As we mentioned earlier, a common measure for Dynamic asymmetry are GDP
fluctuations in different countries, as well as unemployment rate fluctuations, supply and
demand fluctuations, etc.
Asymmetry could be stable and unstable.
Regardless of how different in size two countries
may be, the relations between them could be
stable or unstable, yet the important question is:
“Is Asymmetry between them growing or not?”
The USA, for example, steadily maintain a substantial deficit of their balance of payments, but
as the US dollar is important to the investors’
portfolio, they accept such conditions of trade
and investments and keep the assets of their
portfolio relatively steady.
Stability of asymmetry, which is studied by
examining the balance of payments structure, relates to steady proportions and to the existence
of factors which could influence these proportions. For example, investors might worry about
the return of their investments if there is an
enormous deficit in the balance of payments. If
they feel too insecure, they could sell some of
their assets, which would then affect the interest
rate or the exchange rate. In this case, the balance of payments deficit would not remain
stable by definition. An enormous balance of
payments deficit, however, does not automatically presuppose similar behavior on behalf of
investors. If the economy of the country is characterized by high economic growth, investors
will readily dispose of assets. Then the interest
rate will not rise and the exchange rate will remain the same. And even if assets are sold, this
will not automatically lead to a crisis.
To the state obtaining the credit, a key stable proportion is the share of the deficit in the
GDP of the country. Therefore, if the current account deficit in the balance of payments is
increasing, but the GDP increases at the same
rate and the proportion between the two remains
stable, the deficit will be steady.
When bilateral comparisons are made,
usually a wider set of indexes are employed.
Apart from those mentioned above, in practice
such measures are used as the indexes of structural similarity and a number of other ratios, so
that conclusions can be drawn about existing
discrepancies and above all, what their effect
would be on the further development of the
countries.
The research work done so far about Bulgaria and Romania mainly concern incomes
asymmetry. At the same time, we should take into account the fact that a number of factors
determine discrepancies in incomes and examining these factors could help us identify the
processes that lead to increasing or reducing incomes discrepancies.
4. Performance of agricultural sector in
Bulgaria and Romania
The utilized agricultural area (UAA) in
Bulgaria and Romania is one of the highest in
Europe. It is 14.8 Million ha in Romania, which
is 62.3% of the country territory. This put Romania on the first place in Europe, where the
share of the UAA is 44%.
Table 1
Utilized agricultural area (UAA) in Bulgaria and Romania in 2003
Bulgaria
Romania
Utilized agricultural area, thousand ha
5326.3
14717.4
Share of the country territory, %
48.0
61.7
Arable land, thousand ha
3238.8
9414.3
Share of UAA, %
60.8
64.0
The UAA in Bulgaria is 5,326 Million ha - 48% of the country territory.
Regional differencies in the agriculture of Bulgaria and Romania
43
The distribution of UAA by planning regions (NUTS 2) is presented on table 2. The highest is the
share of UAA in the region territory in the South (Sud) region in Romania (71%). In Bulgaria such region is Nord-East (Severoiztochen).
Table 2
Utilized agricultural area (UAA) in Bulgaria and Romania by planning regions
UAA in 2003,
Share of UAA in the rethousand ha
gion territory,%
Bulgaria
5326,3
48
Nord-West
571,2
53
Nord-Central
1023,7
58
Nord-East
1258,8
63
South-West
692,4
34
South-Central
1116,7
41
South-East
663,5
46
Romania
14717,4
62
Nord-Est
2133,6
58
Sud-Est
2335,8
65
Sud
2443
71
Sud-Vest
1810,7
62
Vest
1892,9
59
Nord-Vest
2090,5
61
Centru
1893,5
56
Bucuresti
117,4
64
In the beginning of 2006 the land privatization is finished in the both countries. It was conducted
mainly as restitution. In Romania the process is affected by previous reform – after the II World War,
when the size of the family farms is restricted to 5 ha. As a result today’s restituted farms are small
and fragmented. Some mistakes in the reform additionally lead to partition of the agricultural land.
Because most of the farmers haven’t access to investment in the last years, they haven’t enough
equipment and are not competitive in the long-term.
From over of 3.9 million farms in Romania, 1.6 million farms (40%) cultivate less than 1 ha land,
which is approximately 6% of the utilized agricultural area. Two third of the farms possess land,
which is less than 3 ha (20% of UAA). Around 290 thousand farms cultivate between 10 and 20 ha
and only some scores till a land over 20 ha. But there are 255 big farms, which possess land of 2000
ha average (12% of the UAA of the country. The average size of one farms for year 2002 is 2,67 ha.4
For the same period the average size of one farm in Bulgaria is 4.7 ha. But after the census of the
agricultural farms, there is established that the UAA of the farms in Bulgaria is 4.36 ha.
Table 3
Structure of the farms in Bulgaria and Romania in 2002, %
0 to 0,5 hа
0,5 to 1 hа
1 to 2 hа
2 – 5 hа
5 – 100 hа
100 – 1000 hа
Over 1000 hа
Bulgaria
Share of farms
Share of UAA
56,0
3,0
23,0
4,0
12,0
4,0
6,0
4,0
3,0
10,0
0,01
42,0
0,01
34,0
Share of farms
15,0
25,9
16,9
24,1
18,0
0,003
0,23
Romania
Share of UAA
0,8
5,2
8,1
23,9
49,5
0,9
12,2
4Agricultural Situation in the Candidate Countries. Romania. European Commission. Directorate General for Agriculture.
July 2002.
44
Management intercultural 14
60
50
Bulgaria Share of farms
40
Rom ania Share of farms
30
Bulgaria Share of UAA
20
Rom ania Share of UAA
10
0
0 to 0,5 0,5 to 1 1 to 2
hа
hа
hа
2 – 5 5 – 100 100 –
hа
hа
1000
hа
Over
1000
hа
Fig. 2. Structure of the farms and UAA in Bulgaria and Romania in 2002, %
As can be seen from table 3 and fig. 2, the share of the small farms (less than 0.5 ha) in Bulgaria
is much bigger than in Romania. But in Romania the farms which are from 2 to 5 ha and from 5 to 10
ha are prevailing. The last group cultivates over of half of the UAA. The smaller group in the both
countries is this of the big farmers. They are less than 1% of the total number of entrepreneurs in the
sector, but they cultivate over than halve of the land in Bulgaria and 13% in Romania. These are farmers, who developed successful their business in spite of the limitations of the transition. They have
large opportunities and probably they will take advantage to a great extend from the structural funds of
EU.
The small farms in both countries are not specialized and they produce only for their own consumption. They rely only on their own skills and they couldn’t be affected by the regulation rules. The
increasing of the competitiveness requires consolidation of the small farms in the both countries.
Therefore the land market and the labour market must become more effective. Because the agriculture
is the main source of income for the farmers, the change of the structure must be directed to alternative
employment for these who will leave the sector.
The used technical equipment in 2002 is shown in table 4. There are for disposal 11 tractors per
1000 ha agricultural land in Romania and 10 in Bulgaria. Romania surpasses Bulgaria in number of
ploughs and other equipment, too.
Table 4
Number of tractors and ploughs to 01. 01. 2003 in Romania and Bulgaria
Number
of tractors
Number of tractors per
1000 ha UAA
Romania
163 711
11,03
Number
of
ploughs
127 829
Bulgaria
32 602
9,73
20 926
Number of ploughs per
1000 ha UAA
8,6
6,2
As a whole Romania is better equipped with agricultural machines, but the facilities are old and
with insufficient technical efficiency in the both countries.
The Gross Value Added (GVA) at basic prices in the agriculture is presented in table 10. GVA is
a difference between the value of production and the intermediate consumption according to Division
01 of NACE Rev. 1.5
5 Statistical Office of the European Commission (EUROSTAT) http://epp.eurostat.cec.eu.int
Regional differencies in the agriculture of Bulgaria and Romania
45
Table 10
Gross Value Added in the agriculture, Million EUR
1999
2000
2001
2002
2003
2004
Bulgaria
1679
1634
1803
1605
1532
1838
Romania
4220
4217
5709
5198
5653
:
Table 11
Share of GVA in agriculture in the GVA of the country, %
Bulgaria
Romania
1998
18,8
16,0
1999
16,3
14,9
2000
13,9
12,4
2001
13,4
14,7
2002
12,1
12,5
2003
11,4
12,9
2004
10,9
*Note: There is a difference between the information of EUROSTAT and the Statistical Yearbook of Romania. The data
in the table are of EUROSTAT.
Because the Gross Value Added and the production volume are determined by the factors in each
country and therefore they are different, the absolute value of these indicators is unusable for the purposes of comparison. That’s why here is presented the GVA per worker in the sector. This is the most
used indicator for the productivity measuring.
The most productive is agriculture in Great Britain - 42 333 EUR per worker in 2003. The GVA
in agriculture in this country is 11 342 Million EUR and it is created by 267.9 thousand employed persons. In Bulgaria in the same year there were engaged tree times more people (797.6 thousand
employed persons), who create 7.5 times less value added (1532 Million EUR).
Bulgaria drops behind EU-15 over 11 times and Romania – almost 10 times. That’s why the
change of agricultural structure is the most important question for the both countries. From all 27
states (member and candidate countries) only Latvia and Lithuania are beyond Bulgaria and Romania.
Table 12
Gross Value Added per employed person in agriculture, EUR
1999
EU-15
Denmark
Latvia
Lithuania
Great Britain
Bulgaria
Romania
19227
29030
1023
:
31420
2107
1216
2000
20313
34461
1571
1288
30780
2093
1180
2001
21547
39910
1710
1390
36690
2355
1630
2002
21004
33768
1581
1431
41944
2165
1912
2003
21730
33451
1580
1639
42333
1921
2242
46
Management intercultural 14
2242
Romania
Bulgaria
1921
Great Britain
42333
Lithuania
1639
Latvia
1580
Denmark
33451
EU-15
21730
0
10000
20000
30000
40000
50000
EUR
Fig. 16. Gross Value Added per employed person in agriculture in 2003, EUR.
The average salary in the agriculture is similar in the both countries. It is approximately ¾ of the
salary in each country. Therefore the sector is not enough attractive from the income point of view.
The employed persons in agriculture of Romania are 2.521 million in 2003, i.e. 34.1% of total
employed people. In Bulgaria for the same year the employed in agriculture are 797.6 thousand, i.e.
26% of the total employment.6
Table 13
Employed persons in agriculture in Bulgaria and Romania in 2003
Bulgaria
Employed persons,
Thousand people
797,6
Romania
2521,0
Share of total employment, %
25,9
34,1
The big number of employed persons in agriculture in Bulgaria and Romania is a serious problem
and the European Commission emphasizes on that in every report for the progress of the countries and
in the monitoring report from 2005. The reasons for the problem are:
• The low productivity of the sector – it is a factor on one hand, and a result on other hand of
the using of too many labour resources;
• The traditions in the both countries;
• The specific of the reform in the agriculture and so on.
A part of the problem will be solved by natural way. In the both countries the population engaged
in the sector gets on age. But nevertheless it is necessary to be taken measurements for re-qualifying of
large part of the people, who work in agriculture.
In the transition period, the level of the agricultural production in Romania is stable. It doesn’t
show the typical decreasing like in the other CEE counties. The scope of the output has minimum deviation, mainly because of the climate factors. The crop output dominates over the livestock output.
The agricultural output decreases significantly in Bulgaria during the transition period. The lowest level is in 1996, when it is 62% of one from 1990. After that the agricultural output shows stability
until 2000, when it decreases again. In the last years the growth of the production is negligible. The
crop production is the half of the total output.
The value of the crop production at basic prices is shown in table 5.
6 Statistical Yearbook (Romania), 2003., Статистически годишник, 2004.
Regional differencies in the agriculture of Bulgaria and Romania
47
According to the EUROSTAT methodology, the basic price is defined as the price received by
the producer, after deduction of all taxes on products but including all subsidies on products. The concept of output comprises sales, changes in stocks, and crop products used as animal feedingstuffs, for
processing and own final use by the producers.
Table 5
Crop output in Bulgaria and Romania for the period 1999 – 2005, Million EUR (at basic prices)7
1999
1 602
6 279
Bulgaria
Romania
2000
1 305
4 975
2001
1 464
6 729
2002
1 708
5 971
2003
1 619
6 570
2004
1 846
8 332
2005
1 621
:
The crop production per inhabitant in 2004 is shown on fig. 3. There are presented for comparison the countries with the highest indicator – Greece and Netherlands and the counties with lowest one
– Malta and Latvia, and the average level in EU-15 and EU-25.
Romania
317
208
Bulgaria
659
Netherlands
Malta
110
Latvia
113
745
Greece
406
EU-15
367
EU-25
0
100
200
300
400
500
600
700
800
EUR per inhabitant
Fig. 3. Crop output in 2004, EUR per inhabitant
Obviously the crop output in Bulgaria per inhabitant is two times lower than in EU-15. Romania
is closer to the average level in EU.
The cereal output for 1992-2004 is presented in table 6. The average volume for Bulgaria is a little over 6 million tons per year and in Romania – near 17 million tons. The deviations are in the same
periods. They are affected by climate factors, which are similar for both countries.
Table 6
Cereal output in Bulgaria and Romania for 1992-2004, thousand tons
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Bulgaria
6644 5717 6462 6600 3435 6209 5856 5924 5242 6056 6754
3814 7463
Romania 12285 15490 18182 19882 14197 22110 15452 17037 10478 18871 14356 12964 24403
7 Statistical Office of the European Commission (EUROSTAT) http://epp.eurostat.cec.eu.int
48
Management intercultural 14
30000
thousand tons
25000
20000
Bulgaria
15000
Romania
10000
5000
0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Fig. 4. Cereal output in Bulgaria and Romania for 1992-2004, thousand tons
The variation of wheat output is shown on fig 5. The data is per inhabitant, too. The average production of wheat in Bulgaria for the period 1992 – 2004 is 415 kg per inhabitant, in Romania – 238 kg
and in EU-15 – 251 kg. At first sight it looks, that Bulgaria has competitive advantage in wheat production. But the yields of wheat and of cereals in general are much lower in Bulgaria and Romania,
than in EU, as it’s shown in table 7. Therefore the competitive advantage of Bulgaria is only extensive.
Table 7
Yields of cereals and wheat in Bulgaria and Romania for the period 1992 – 2004, tons per ha
Cereal
4.7
5.4
2.9
2.7
ЕU-25
ЕU-15
Bulgaria
Romania
Wheat
5.2
5.6
2.9
2.5
600
kg per inhabitant
500
400
EU-15
300
Bulgaria
Romania
200
100
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
0
Fig. 5. Wheat production per inhabitant in Bulgaria, Romania and EU-15 for the period 1992 – 2004
Regional differencies in the agriculture of Bulgaria and Romania
49
In the maize production the interrelation is contrariwise. In Romania the maize output per inhabitant is 2.4 times more than in Bulgaria. The average level for Bulgaria is 74 kg per inhabitant and for
Romania – 422 kg. The extreme levels are in the same years. But the amplitudes in Romania are higher because of the large areas with product. The average output per inhabitant in EU-15 is 95 kg. It
seems that Romania has competitive advantage in maize production, but this advantage is extensive,
too. The average yield in EU-15 for the period 1992 – 2004 is 8.5 tons per ha. The yield in Romania is
3.1 tons and in Bulgaria – 3.3 tons per ha.
600
kg per inhabitant
500
400
EU-15
300
Bulgaria
Romania
200
100
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
0
Fig. 6. Maize production per inhabitant in Bulgaria, Romania and EU-15 for the period 1992 – 2004
In the sunflower production, Bulgaria (with 78 kg per inhabitant for the research period) outstrips
Romania (with 45 kg per inhabitant). Both countries leave behind EU-15, where the average level of
sunflower production is 10 kg per inhabitant for the same period. Bulgaria and Romania have competitive advantage and even increase the production in the last years, but this advantage is extensive,
again. The average yield of sunflower in Bulgaria and Romania for the period 1992 – 2004 is 1.2 tons
per ha, and in EU-15 – 1.6 tons per ha.
160
140
kg per inhabitant
120
100
Bulgaria
80
Romania
EU-15
60
40
20
0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Fig. 7. Sunflower production per inhabitant in Bulgaria, Romania and EU-15 for the period 1992 – 2004
50
Management intercultural 14
The sugar beet output decreases in both countries. In Bulgaria this industrial crop has even any
practical importance for sugar refining. In 2004 there was produced 26 000 tons sugar beet. This is 12
times less than the level from 1992 and 65 times less than the level from 80 years. The trend is similar
in Romania, but there are cultivated still 700 thousand tons sugar beet per year. This volume is insufficient, because it covers only 15% of the necessary row material for sugar production. That’s why both
countries import non refined sugar. The average production of sugar beet for the period 1992 – 2004 in
Bulgaria is 10 kg per inhabitant, in Romania – 80 kg and in EU-15 – 304 kg. The deep crisis in the
sector can be seen from the productivity, too. The average yield of sugar beet in Bulgaria is 16.8 tons
per ha, in Romania – 21.3 tons and in EU-15 – 57.1 tons per ha. Therefore both countries have no
competitive advantage in sugar beet production. Just the contrary, this sector is in deep crisis and
probably in the next years the import will continue.
350
300
kg per inhabitant
250
EU-15
200
Bulgaria
150
Romania
100
50
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
0
Fig. 8. Sugar beet production per inhabitant in Bulgaria, Romania and EU-15 for the period 1992 – 2004
In potatoes production Romania (with 159 kg per inhabitant per year) outdistances Bulgaria,
where the production is 62 kg per inhabitant for the same period. In EU-15 the output of potatoes is
124 kg per inhabitant, but the yields are very different. Both Bulgaria and Romania are far behind EU15 level.
Table 8
Yields of potatoes in the period 1992 – 2004, tons per ha
EU-25
EU-15
Bulgaria
Romania
Yields
25.1
34.0
11.3
13.5
Regional differencies in the agriculture of Bulgaria and Romania
51
250
kg per inhabitant
200
150
EU-15
Bulgaria
Romania
100
50
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
0
Fig. 9. Potatoes production per inhabitant in Bulgaria, Romania and EU-15 for the period 1992 – 2004
The tobacco production is shown on fig. 10. Because of the better climate conditions for this crop,
and because of the traditions, the level of tobacco output in Bulgaria is much higher than in Romania.
The production per inhabitant in Bulgaria is 6.4 kg and in Romania – 0.48 kg. It couldn’t be made
analogy with EU countries, because this crop is cultivated only in Mediterranean and any comparison
will be misled.
It can be noted that the tobacco production decreases in the last 20 years in Bulgaria. The volume
for 2004 for example is only 70 thousand tons, while there were produced 170 thousand tons in the
past. According to specialists, it is needed changing of the structure of the sorts in favor of the so
called “light” tobacco, like “Virginia”.
The yield of tobacco in Bulgaria and Romania is almost the same – 1.2 – 1.3 tons per ha. The
yield of tobacco in EU-15 is twice – 2.6 tons per ha.
10,0
kg per inhabitant
8,0
6,0
Bulgaria
Romania
4,0
2,0
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
0,0
Fig. 10. Tobacco production per inhabitant in Bulgaria, Romania and EU-15 for the period 1992 – 2004
Therefore the main problem in both countries is the low yields. Bulgaria and Romania are far behind the EU level in the most crop yields and the difference is many times. Consequently all
52
Management intercultural 14
competitive advantages of Bulgaria and Romania are extensive. They are achieved by including of
more production factors – labour and capital, than in the EU countries. Hence the whole sector could
be re-structured in the next years and the core must be the increasing of the productivity.
The livestock production in Bulgaria and Romania is presented in table 9. While the output in
Romania increases until 2002 and drops a little in the last years, in Bulgaria the level in 2005 is with
17% less than in 1999.
Table 9
Livestock production in Bulgaria and Romania for the period 1999-2005, mil. EUR8
1999
1338,2
2687,2
Bulgaria
Romania
2000
1448,1
2992,7
2001
1530,5
3863,0
2002
1186,9
4201,8
2003
1018,7
3759,6
2004
1087,9
3465,4
2005
1110,7
:
The livestock production per inhabitant is presented on fig. 11. There are shown the two countries
with highest levels – Ireland and Denmark, and the two countries with lowest levels – Latvia and Lithuania. As can be seen the livestock production in Bulgaria is twice times less than in EU-25.
Romania
173
Bulgaria
130
Lithuania
141
95
Latvia
1091
Ireland
Denmark
851
EU-15
305
EU-25
281
0
200
400
600
800
1000
1200
EUR per inhabitant
Fig. 11. Livestock production in 2004, EUR per inhabitant
The variation in the livestock is much smaller, than in crop production. The trend of meet production is shown on fig. 12. In the both countries the volume of meet drops behind the EU level. The
average output for the research period in Bulgaria is 103 kg per inhabitant, in Romania – 81 kg and in
EU-15 – 192 kg per inhabitant.
8 http://epp.eurostat.cec.eu.int
Regional differencies in the agriculture of Bulgaria and Romania
53
kg per inhabitant
250
200
150
EU-15
Bulgaria
100
Romania
50
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
0
Fig. 12. Meet production in Bulgaria, Romania and EU-15 for the period 1990 – 2004 г., kg per inhabitant
The same situation is in the milk production. The average output for the research period in Bulgaria in 2004 is 205 liters per inhabitant, in Romania – 266 liters and in EU-15 – 333 liters per
inhabitant.
400
Liters per inhabitant
350
300
250
EU-15
200
Bulgaria
150
Romania
100
50
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
0
Fig. 13. Milk production in Bulgaria, Romania and EU-15 for the period 1990 – 2004 г., liters per inhabitant
There is dramatic drop in the wool production in Bulgaria. The decreasing for the period 1990 –
2000 is 3.5 times. Such reduction is characteristic of Romania, too, but in the last years the decreasing
is insufficient. The potential of both countries for wool production in 2000 is the same.
54
Management intercultural 14
3,5
kg per inhabitant
3
2,5
2
Bulgaria
Romania
1,5
1
0,5
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
Fig. 14. Wool production in Bulgaria and Romania for the period 1990 – 2000, kg per inhabitant
The eggs production is better developed in Romania, where the output for the period 1990-2000
is 263 eggs per inhabitant per year. In Bulgaria the volume is 211 eggs and in EU-15 – 304 eggs per
inhabitant per year. There is a similar decreasing of the production in the both countries, as can be
seen from fig. 15.
number per inhabitant
400
350
300
250
Bulgaria
200
Romania
150
100
50
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
Fig. 15. Eggs production in Bulgaria and Romania for the period 1990 – 2000, number per inhabitant
The farms in Romania produce enough livestock production for satisfying the internal consumption in the last years. There was a tendency of slowing only of the poultry meet supplying. Bulgaria is
slowing in the beef and milk production for internal consumption. For example the net import of meet
and meet products in 2004 is roughly 8 Million EUR.9
9 Развитие на производството и продажбите на месо в България. Отраслов анализ. СФБ Капиталов пазар.
http://www.sfb.bia-bg.com/index.php?sel=71
Regional differencies in the agriculture of Bulgaria and Romania
55
5. Between conclusion
Bulgaria and Romania have significant potential for development of agriculture. They own one of
the largest utilized agricultural areas in Europe and high level of employed persons in the sector.
But the productivity of the sector is small and the reasons are:
• Fragmentation of the land;
• Large number of semi-subsistence farms, which work mainly for their own consumption;
• Insufficient technical equipment;
• Low productivity of the employed persons.
Agriculture falls in a deep crisis in the transition period in the both countries and especially in
Bulgaria. The volume of the agricultural products decreased, the income lessened, and the quality
changed for the worse, the tie with food industry was interrupted and the traditional external markets
were lost.
As a result from the low effectiveness, Bulgaria and Romania seem to be the slowest from all 27
state members and candidate countries in all agricultural indicators.
In spite of that there are indications for stabilizing of the agricultural sector, especially
in Romania. It concerns mainly the crop production, where the indicators of the both countries
are better than in the livestock. Bulgaria and Romania have some competitive advantages in
the wheat, maize, sunflower production but these advantages are only extensive, achieved by
including of more labour and capital.
The agricultural trade between Bulgaria and Romania become more intensive in the last years.
Traditionally the balance is positive for Bulgaria, i.e. the export exceeds the import. Exception is 2004,
when because of the weak yield of wheat, import was necessary and the trade balance became negative.
Table 14
Agricultural trade between Bulgaria and Romania, thousand USD10
Export (FOB) to Romania
Import (SIF) from Romania
Balance
2003
38 661
16 854
21 807
2004
35 411
53 334
-17 924
The difference between the two countries on one hand and EU on other hand is mainly in the effectiveness of the sector. This means that Bulgaria and Romania fail to use in best way their big
natural and human potential in agriculture.
The general conclusion is that both countries have some common strengths and weaknesses, opportunities and treats. They are presented in table 15. With the biggest weigh in the weaknesses are the
duality of the farms and the fragmentation of the sector, which doesn’t allow applying of scale economy and increasing of the competitiveness of farms.
Table 15
SWOT analysis of Bulgarian and Romanian agriculture
Strengths
Traditions in agriculture
Weaknesses
Extensive agriculture
Favorable climate,
fertility soil
Fragmented agricultural area
Opportunities
Integration to the
Common
European
market
Potential for producing
of organic products
Treats
High level of input
for the small farms
Bad
distribution
channel of agricultural products
10 Годишен доклад за състоянието и развитието на земеделието
http://www.mzgar.government.bg/OfficialDocuments/Agry_report/Agry_report_2005.htm
(Аграрен
доклад)
2005.
56
Management intercultural 14
Strengths
Low labour costs in
agriculture
Concluded privatization/
Restituted land
Weaknesses
Big share of the
semi-subsistence
farms under 2 ha,
duality of the farms
Insufficient market
orientation of agriculture
Outdated
equipment/technique
Opportunities
Cooperation of Bulgarian and Romanian
farms from food industry
Treats
Strong competition
from EU
Uncompetitive food
industry
In addition to these common features, Bulgaria and Romania have some specific strengths and
weaknesses, opportunities and treats:
• Romania
o Strengths:
The second agricultural manufacturer in CEE next to Poland (62% of the territory is agricultural area);
Big internal market (2,8 times bigger than Bulgarian);
o Weaknesses:
Low labour productivity because of the land fragmentation.
o Opportunities:
Big human potential (45% of the population live in rural areas);
Large number of agricultural specialists (over 60000 experts with university
and high education);
o Treats:
The young people don’t own land, many farms are managed by aged farmers;
Low level of absorption of pre accession funds in agriculture
• България
o Weaknesses:
Small internal market
o Opportunities:
Many traditional products are still known in Russia and some Arabian countries;
Uncultivated land.
The similarity in the agricultural structure of both countries is a precondition for competition between them. This competition didn’t put into practice until now mainly because of the decreasing of
the agricultural output especially in Bulgaria. Both countries produce basically to satisfy their internal
needs. The export is relatively small and it is mostly of crop production (wheat, maize, barley, sunflower and so on).
Both countries have unused potential for production, which is a precondition to competition, too.
This potential is bigger for Romania, especially in livestock, where the output is on the level of 1989
and before.
In spite of these premises, with a view to the coming structural changes, which are expect to be
painful and difficult, in the government agenda of both countries will be such problems as increasing
of agriculture competitiveness and managing the accession challenges, not the competition between
neighbors. As future full member states Bulgaria and Romania will have the opportunity to solve any
discrepancies in the European way – by participation, discussion and implementation of the resolutions of EU – quotas, referent prices and so on. In this way slow as it is, the Community has solve all
contradictions and debates.
Regional differencies in the agriculture of Bulgaria and Romania
57
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